Ecco has said it achieved record sales and profits in 2018, despite a challenging retail environment and currency headwinds.
Revenues improved by 2.6 percent to €1,310 million, while pre-tax earnings increased by 9.2 percent from the previous year to €200.7 million, indicating a comfortable margin. Currency fluctuations had a negative impact: in constant currencies, pre-tax earnings soared by 11.7 percent.
Sales of footwear rose by 5 percent at constant exchange rates, while accessories and leather grew by 5.8 and 6.5 percent, respectively.
Continued investments in direct-to-consumer (DTC) sales channels resulted in retail and e-commerce sales growing by 14 percent, with the e-commerce channel soaring by 36 percent in constant currencies.
At the end of last year, Ecco's products were sold in 90 countries at a total of 2,246 Ecco shops – 14 more than a year earlier. In Asia-Pacific alone, the number of Ecco shops grew to 1,296.
In terms of geographic areas, Europe, the Middle East and Africa (EMEA) accounted for 41 percent of sales, Asia-Pacific for 36 percent, and the Americas for 23 percent.
In the wholesale segment, sales grew by 1.7 percent in constant currencies. Asia and the Americas performed well, boosted by effective partnerships. However, Europe was weaker, as the retail market remained under pressure, resulting in partners closing some shops.
In the retail segment, revenues increased by 9.6 percent in constant currencies, driven by organic growth in most markets and new store openings. China faced some challenges. In particular, department stores recorded lower traffic. However, the Greater China region – which includes China, Hong Kong, Macao and Taiwan – continued to expand the retail footprint with new stores openings. Sales increased by 11 percent in constant currencies.
Asian markets outside Greater China grew by 6.1 percent in constant currencies, led by new store openings and same-stores sales growth in South Korea, Japan and Singapore. In particular, sales of accessories rose by 30 percent.
Europe saw sales decline by 3.1 percent in constant currencies. Sales to Russia and the Middle East also declined. However, the American market jumped by 12.6 percent in constant currencies, with growth across all sales channels. E-commerce was the main driver, with revenues jumping by 25 percent.
The company did not release any exact figures on its gross margin. The operating margin rose by 0.9 percentage points to 15.8 percent. Ecco ended the year with a strong cash position and a solvency ratio of 58.7 percent.
Looking at 2019, the group expects to continue to strengthen its direct-to-consumer activities, with investments in omni-channel capabilities and systems to support operational improvements at individual stores and to expand the digital business. A modest increase in sales and profits is expected for the year in constant currencies, assuming a continuation of current macro-economic trends.